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International Business

 

Study Material

 

Case Study

International Business Case Study

Read the case given below and answer the following questions based on the case study.

Answer any Four Questions  of the following

 

Impact of Saudi Arabian Culture on International Business

Saudi Arabia is a land of contrasts and paradoxes. It has Super modern cities, but its strict Islamic religious convictions and ancient social customs, on its laws and customs depend, often clash with modern economic and technical realities. This sometimes employ latitude in legal formation and enforcement to ease these clashes and accommodate different behaviors from foreigners. Nevertheless, many foreigners misunderstand Saudi laws and customs or find them contrary to their own value systems. Foreign companies have access in Saudi Arabia, due in large part to how well they understood and adapted imaginatively to Saudi customs.

 

An importer halted sales of the children's game Pokimon because the game might encourage the un-Islamic practice of gambling, and a franchiser was forced to remove the face under the crown in Starbucks' logo because Saudi authorities felt the public display of a woman's face was religiously immoral. However, most companies know the requirements in advance.

Companies, such as McDonald's, dim their lights, close their doors, and stop attending to customers during the five times per day that men are called to pray. Companies also adjust voluntarily to gain the goodwill of customers-for example, by converting revenue-generating space to prayer areas. During the holy period of Ramadan, people are less active during the day because they fast, so many stores shift some operating hours to the evenings when people prefer to shop.

In 2000, Saudi Arabia ratified an international agreement designed to eliminate the discrimination of women; however, its prescribed behaviors for women appear paradoxical to outsiders. On the one hand, women now outnumber men in Saudi Arabian universities and own about 20 percent of all Saudi businesses. (There are separate male and female universities, and female-owned businesses can sell only to women.) Women also comprise a large portion of Saudi teachers and doctors. On the other hand, women account for only about 7 percent of the workforce. They cannot have private law or architectural firms, nor can they be engineers. They are not permitted to drive, because this may lead to evil behavior. They must wear abayas (robes) and cover their hair completely when in public. They cannot work alongside men except in the medical profession, and they cannot sell directly to male customers. If they are employed where men work, they must have separate work entrances and be separated from males by partitions. They must be accompanied by an adult male relative when dealing with male clerks.

The Saudi American Bank in Saudi Arabia has established branches for and staffed only by women. Pizza Hut installed two dining rooms-one for single men and one for families. (Women do not eat there without their families.) Both Harvey Nichols and Saks Fifth Avenue have created women-only floors in their department stores. On lower levels, there is mixed shopping, all male salespeople (even for products like cosmetics and bras), and no change rooms or places to try cosmetics. On upper floors, women can check their abayas and shop in jeans, spandex, or what- ever. The stores have also created drivers' lounges for their chauffeurs. A downside is that male store managers can visit upper floors only when the stores are closed, which limits their observations of situations that might improve service and performance. Similarly, market research companies cannot rely on discussions with family-focused groups to determine marketing needs. Because men do much more of the household purchasing, companies target them more in their marketing than in other countries. Why do high-end department stores and famous designers operate in Saudi Arabia where women cover themselves in abayas and men typically wear thobes (long robes)? Simply, the many very rich people in Saudi Arabia are said to keep Paris couture alive. Even though Saudi Arabia prohibits fashion magazines and movies, this clientele knows what isin fashion. (The government also prohibits satellite dishes, but some estimates say that two-thirds of Saudi homes have them.) Women buy items from designers' collections, which they wear abroad or in Saudi Arabia only in front of their husbands and other women. Underneath their abayas, they often wear very expensive jewelry, makeup, and clothing. Wealthy men also want the latest high-end fashions when traveling abroad.. Changing economic conditions are at least partially responsible for this situation. In the early 1980s, Saudi oil revenues caused per capita income to jump to about $28,000, but this plummeted below $7 ,000 by the early 2000s. When incomes were high, Saudis brought in foreigners to do most of the work. At the same time, the government liberally supported university training, including study abroad. Saudis developed a mentality of expecting foreigners to do all the work or at least some of the work for them. The New Zealand head of National Biscuits & Confectionery said that Saudis now want only to be supervisors and complain if they have to work at the same level as people from Nepal, Bangladesh, and India.

 Q1. Discuss the impact of Saudi culture on marketing strategies followed by Multi national Companies.

Q2.  The attitude of Saudi Nationalís in taking up employment positions have a definite impact on the growth of the country. Discuss.

Q3. The growth of economic development is dependent on the cultural background of both the home country and host country. Discuss.

Q4.      Discuss many foreigners misunderstand Saudi laws and customs or find them contrary to their own value systems

Q5.      What is the Saudi view on employment by gender?  Discuss.

Q6.      Why do multi-national companies still believe that doing business with Saudi Arabia is beneficial for them? Explain.